Independent Research and Policy Advocacy

Status of Health Systems in India at National and Subnational Levels

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This note was first published as a part of session 1 of the four-part webinar series hosted by Dvara Research and IndiaSpend on “Reform Pathways for Healthcare financing in India”. In it, we use the Control Knobs framework to look at how states in India do on intermediate and performance indicators with the help of some recent evidence. We examine in greater detail the performance of the Indian health system using one of the control knobs- financing. We further explore broad pathways to reform health care financing in India.

“Control Knobs” framework (Roberts, Hsiao, Berman, and Reich, 2004) is a commonly used framework to characterise different health systems. In this, different “Control Knobs” which include financing, payment systems, organisation of healthcare, regulation of healthcare, and behaviour change, can be “dialled” up or down to generate outcomes. These outcomes can be measured using three intermediate indicators of: (i) efficiency, (ii) quality, and (iii) access, and three outcome indicators of: (iv) health status, (v) customer satisfaction, and (vi) risk protection.

In this note, we use the “Control Knobs” framework to examine how states in India perform on intermediate and eventual outcome indicators, with the help of recent evidence. Using C-Section rates as a proxy for emergency care abilities of a region, we see that there are very wide variations in the access to emergency care in India, with states in the north and the east showing very low rates, well below the WHO benchmark of 10%, and those in the south going as high as 80% in some districts.  Data on emergency-care point to the poor performance of the Indian health system on the intermediate indicators of efficiency, quality, and access, and on the outcome indicators of health status, customer satisfaction, and risk protection. We observe similar instances of poor performance on indicators and wide variation in performance across states, in maternal and child health, suicides, and burden of chronic disease.

While any significant reform in health care would require the use of more than one control knob, we focus specifically on the financing knob to further study the status of health systems in India. Currently, India’s total healthcare spending is at 3.6% of the GDP (Mehra, 2020). At 64%, Out of Pocket (OOP) expenditure forms the largest share of India’s health spending. Whatever limited risk pooling India does have in the form of fiscal funding, voluntary commercial insurance contributions and mandatory social insurance contributions, is highly fragmented across multiple commercial, social, union-sponsored and state-level risk pooling schemes. Additionally, we find massive differences in both spending as well as level of pooling between states.

The evidence gathered suggests that there are a number of areas in which Indian health systems can improve even in the best performing states. In this note, we chalk out potential pathways that can be explored to reform health systems in India. An increase in total health expenditure can improve health outcomes. This, however, may require an external thrust in the form of accelerated economic growth. In this context, it is important to better understand the case of nations that have done well on health indicators even with low spending. Even with current levels of spending, it benefits to increase the share of pooling as evidenced by the significant progress on health outcomes made by countries with pooling as the dominant financing mechanism. Even if the extent of pooling cannot immediately be increased, the performance of some of largest pools, including those managed by the state-level departments of health, State Health Authorities, the Employees’ State Insurance Corporation, and commercial insurers,  can be improved substantially, and they can go on to provide the foundations around which a higher performing Indian health system can be constructed. Given the low quantum of pooled funds and the likelihood of this situation persisting well into the future, measures to improve the effectiveness of out-of-expenditures need to be improved in the near-term. Among other things, improving the supply of trained human resources at all levels; using tools such as branding to make higher quality more visible to patients; and using a number of mechanisms to improve the quality and quantum of primary care services that are being offered by the current set of primary care providers are some measures that can be considered.

The full note is available here.

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